TL;DR Breakdown
- Kyrgyzstan’s President has approved a cryptocurrency mining farm, aiming to use excess power and boost income.
- Despite energy sector challenges, the President ensures the mining farm won’t strain power supplies.
- As Kyrgyzstan explores cryptocurrency’s economic potential, it plans to impose high tariffs on crypto mining.
Description
In a recent move towards energy and economic optimization, Kyrgyzstan’s President Sadyr Japarov has greenlit the establishment of a cryptocurrency mining farm in the Central Asian nation. Japarov addressed claims from RFE/RL media in a candid interview with the “Kabar” agency, debunking assertions regarding the controversial prioritization of power to private mining companies over Kyrgyz … Read more
In a recent move towards energy and economic optimization, Kyrgyzstan’s President Sadyr Japarov has greenlit the establishment of a cryptocurrency mining farm in the Central Asian nation. Japarov addressed claims from RFE/RL media in a candid interview with the “Kabar” agency, debunking assertions regarding the controversial prioritization of power to private mining companies over Kyrgyz citizens.
The President affirmed the state’s inability to provide electricity throughout winter but assured the populace that missing electricity will be bought from abroad, posing no detriment to the state’s economy. Instead, Japarov posits a lucrative prospect for the energy system, describing a net profit scenario wherein mining sold to the farm will not only return substantial revenue but also contribute significantly to the tax system.
The primary location for the proposed mining farm is the Kemin district, chosen for its existing power capacity. The President stressed that the mining farm’s establishment would not occur at the expense of the common populace, assuring that the operation would cease during winter months to prioritize the people’s electricity needs.
In six months, the Kemin mining farm is projected to contribute millions of soms to both the energy system and tax inspectorate, benefiting the state and the people. The President envisions this enterprise as a profit-oriented venture for the state with no potential losses, reinforcing the local budget’s strength as taxes are projected to be paid locally.
Furthermore, President Japarov explicated plans to construct hydroelectric power plants that will reduce the nation’s dependency on imported electricity. By the end of the year, Kyrgyzstan aims to transition from an electricity-importing nation to an exporting one. Japarov expressed commitments made to the World Bank, emphasizing the task of exporting electricity to Pakistan and Afghanistan through the CASA 1000 line starting next year.
Approximate $20 million will be invested in building a cryptocurrency mining facility at the Kambar-Ata-2 Hydro Power Plant, eliminating energy losses associated with the unused power from the plant. Kyrgyzstan has reportedly suffered significant energy losses, accumulating to 6.8 billion kilowatt-hours (kWh) since the plant’s inauguration in 2010. The advent of the mining farm is intended to circumvent such loss, harnessing the remaining energy to supplement the country’s budget.
Energy challenges and the growing interest in cryptocurrency in Kyrgyzstan
However, these developments coincide with a recently announced state of emergency in the energy sector, scheduled to start on August 1, 2023, and expected to end on December 31, 2026. This has been attributed to climate challenges, diminished water inflow into the Naryn River basin, and lack of generating capacity due to the growth of energy consumption.
Despite these energy challenges, the Kyrgyz President continues to express the potential economic benefits of crypto mining. Cryptocurrency mining will be tariffed at the highest rate in Kyrgyzstan, around 5 Kyrgyzstani soms ($0.057) per kW.
In recent years, cryptocurrency has been perceived as a burgeoning opportunity to enhance the local economy in Kyrgyzstan. Kyrgyz lawmaker Karim Khanjeza’s appeal for crypto industry legalization during a 2022 parliamentary committee meeting further evidences this growing interest. However, regulatory steps have yet to be taken by the government, despite some regulations introduced for crypto exchanges in 2021.
This ongoing push towards cryptocurrency mining is seen as a significant step forward in utilizing energy resources more efficiently, thus potentially bolstering the local economy and public budget.
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